VC-BACKED M&A SNAPSHOTQ2 2013

July 11th 2013

1.

2.

3.

4.

OVERVIEW COMMENTARY

Despite the lower overall M&A activity levels in Q2 (see our Q2 2013 M&A Snapshot), venture-backed M&A exits remained relatively consistent with Q1 2013 levels, as we saw 11 transactions within the $25mm - $1b range. Total consideration paid for VC-backed companies was equal to Q1‘s value of $2.1b.

Summary observations for the quarter include:

The largest venture-backed exits this quarter were Google’s $1.3b acquisition of crowdsourced traffic app, Waze, representing a 19.4x investment return and Yahoo’s $1.1b acquisition of micro-blogging social network, Tumblr, representing a 8.8x return on invested capital.

The median return on invested capital was 8.8x(a)

Five transactions within the $25mm - $1b value range provided >10.0x invested capital multiple returns to investors:

U.S. sellers comprised 72% of total VC-backed transactions within Q2 2013.

FOLLOWING ANALYSIS

SUMMARY OF VC-BACKED M&A EXITS:

VC-BACKED M&A TRANSACTIONS:

SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE

L I S T I N G O F V C - B A C K E D TRANSACTIONS.

VC-BACKED M&A SNAPSHOT

Trx Value/Invested Cap

37.8x26.0x17.6x12.1x

10.0x

Seller Description

Tween-focused Youtube channel Mobile app location-based servicesMarketing automation platformMobile backend-as-a-service platformEnterprise class storage

(a) Note: Data pertains to 10 transactions in the quarter (out of a total of 11), where both acquisition price and total invested capital were disclosed between the $25mm - $1b range.

Buyer / Seller

Dreamworks / AwesomenessTVAruba / Meridian AppsAdobe / Neolane Facebook / ParseFusion-io / Nexgen Storage

2

COVERAGEArchitect Partners tracks venture capital-backed M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on venture capital-backed M&A transactions with announced values of between $25mm and $1b as these typically represent successful business-building endeavors. We also include two transactions with announced values above $1b.

Note: 1) Dark blue includes VC-backed M&A transactions with announced values of between $25mm and $1b. Light blue includes notable VC-backed M&A transactions where consideration paid was >$1b or not announced, however we believe to have values of between $25mm and $1b.2) Total consideration paid and median transaction size are calculated based on transactions with announced values of between $25mm and $1b.3) Percentage is based on U.S. target, calculated based on cumulative transactions.4) Transaction values with a range are presented as a mid-point value

3

MARKET TONEAverage. Relatively consistent number of VC-backed exits and total consideration paid. Quality businesses with momentum will continue to attract strong interest. Strategic-driven transactions command premium values.

Venture-Backed M&A Exits (#)1............................

Total Consideration Paid ($b)2,4............................

Median Transaction Size ($mm)2,4........................

U.S.-based Target (%)3.............................................

27

21

2011 Q2 Q3 Q4

16

25

2012Q1 Q2 Q3 Q4

20

15

VC-BACKED M&A SNAPSHOT - SUMMARY

75% 84%

73% 75%

12 16 15 12

9 5

3

$129 $152

$76

$112

$1.8

$3.7 $3.8 $3.1

4

2013Q1 Q2

1427 23 23 19

4 2

$4.2 $3.4 $3.6

$2.3

$103 $104 $80

$95

63% 64% 67% 73%

12 16 12 11

9

2 2

13

$1.8

$3.7

$2.1 $2.1

$129 $152

$123 $150

63% 64% 71% 72%

4

Source: Architect Partners, Capital IQ and Public Information

Below we highlight Q2 2013‘s venture capital-backed M&A exits. This list contains transactions within the $25mm to $1b value range as well as two transactions exceeding $1b.

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

INVESTED

CAPITAL ($mm)TARGET ACQUIRER

ACQUISITION

PRICE ($mm) VENTURE CAPITAL FIRMS

MULTIPLE OF

INV. CAPITAL

$1,300

$1,100

$600

$370

$310

$180

M&A

ALERT

TARGET

LOCATION

$67

$125

$34

$60

$84

$34

19.4x

8.8x

17.6x

6.2x

3.7x

5.3x

5

Source: Architect Partners, Capital IQ and Public Information

Below we highlight Q2 2013‘s venture capital-backed M&A exits. This list contains transactions within the $25mm to $1b value range as well as two transactions exceeding $1b.

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

INVESTED

CAPITAL ($mm)TARGET ACQUIRER

ACQUISITION

PRICE ($mm) VENTURE CAPITAL FIRMS

MULTIPLE OF

INV. CAPITAL

$151

$150

$120

$90

$85

$30

$26

M&A

ALERT

TARGET

LOCATION

$4

NA

$12

$12

$7

$10

$1

37.8x

NA

10.0x

7.5x

12.1x

3.0x

26.0x